Young companies thinking they might be worth billions may need a reality check. Despite the hubbub over select startups such as WhatsApp, the mobile-messaging app bought by Facebook for $19 billion, first-round valuations for U.S. startups fell last year, data show, even as later-round valuations surpassed levels of the dot-com era.
Seed-round funding valuations—set as a business prepares to launch, or soon after—dropped nearly 30% in 2013 to nearly $2 million, from $2.7 million in 2012, and less than half of a $4.8 million high set in 2000, according to Dow Jones VentureSource. Likewise, first-round funding valuations fell to $5 million, down 28% from $7 million in 2012 and off 58% from 2000’s $12 million.